A bank has got hundreds of porn stars hot and fired up after writing to them to tell them their bank accounts would be closed, News.com.au reports.

The move has sparked fury throughout the adult entertainment industry with workers saying they had no idea why they were being targeted.

Chase bank sent letters to industry workers revealing the accounts would be closed next month.

In the letters sent out by the bank, which is a subsidiary of JP Morgan Chase, no reason is given for the closure but an apology is given for the inconvenience.

“We recently reviewed your account and determined that we will be closing it on May 11, 2014,” it reads.

“You may close your account before the date we’ve provided. Your account agreement says that either of us may close your account at any time, without notice and without a reason,” the letter states.

Porn star Teagan Presley said her account was closed and she was turned down when she tried to open another one.

“I called them and they told me that because I am, I guess, public and am recognizable in the adult business, they’re closing my account,” she told adult industry site XBiz News.

It was unknown exactly how many workers have been affected, however adult industry lawyer Michael Fattoros said banks had closed accounts belonging to industry workers in the past, though “not on this scale”.

On the face of it, these actions don’t make a whole lot of sense. This situation is entirely different, for example, from the problems that many businesses selling legal marijuana in states such as Colorado and Washington are having in opening bank accounts. In those cases, financial institutions have cited the fact that the business they engage in, while legal under the laws of their state, is completely legal in their home state, it remains illegal in much of the rest of the country and under Federal law. Here, we’re talking about an industry that is perfectly legal. Additionally, the accounts being closed aren’t limited to business accounts that are, say, used to run adult websites, but personal accounts that, at the most, are used to deposit paychecks and pay bills. In one report, a performer who had her account closed said that the account is one she’d had since she was a teenager. While I’m not aware of any law that would prevent banks from, in effect, discriminating against customers based on the business they are in, there’s certainly something about it that seems unfair and heavy handed.

Whatever you might think about the adult film industry, and based on the revenue it garners and the traffic that its websites receive it would appear that most Americans don’t really have much of a problem with it, it’s a legal business. While current banking laws generally only cover discrimination based on race, gender, and religion, the idea of banks being able to deny people access to the banking system based on where they work is troubling. Potentially, it’s something that could be easily abused if, say, a large bank decided to close the accounts of anyone who worked for political candidates that voted against the bank’s interest. If there’s evidence that the accounts are being used for fraudulent or illegal purposes, then certainly a banking institution should have the authority to protect its own interests. There’s no evidence of that here, though, especially not when we’re talking about completely private accounts.

Under “Operation Choke Point,” the DOJ and its allies are going after legal but subjectively undesirable business ventures by pressuring banks to terminate their bank accounts or refuse their business. The very premise is clearly chilling—the DOJ is coercing private businesses in an attempt to centrally engineer the American marketplace based on it’s own politically biased moral judgements. Targeted business categories so far have included payday lenders, ammunition sales, dating services, purveyors of drug paraphernalia, and online gambling sites.

The theory behind this enforcement program has superficial logic: increase the legal and compliance costs of serving certain disfavored merchant categories, and payments companies will simply stop providing service to such merchants. And it’s working – payments companies across the country are cutting off service to categories of merchants that – although providing a legal service – are creating the potential for significant financial and reputational harm as law enforcement publicizes its activities. Thus far, payday lenders have been the most frequent target. Whatever the merits of payday lending – and there are valid arguments on both sides -it is legal in 36 states. And if payday lenders are today’s target- what category will be next and who makes that decision?

So far, the DOJ is refusing to comment in response to questions regarding whether there is a connection between Operation Choke Point and Chase’s actions with regarding to the adult film industry. Whether that’s the case or not, the program itself is something that we ought to be having more of a conversation about. It’s bad enough if Chase, on its own, is targeting customers for termination based on nothing other than the industry they happen to work in. It’s another thing entirely if they are doing it in response to a government program that is already unfairly targeting people in other completely legal businesses over generalized suspicions of fraud.

Related Posts:

About Doug MataconisDoug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May, 2010 and also writes at Below The Beltway.
Follow Doug on Twitter | Facebook

I don’t know if this is because of overzealousness or incompetence or laziness (probably all three) but this sure has gone in a direction it shouldn’t be going. This is the kind of crap that Congress should be investigating; not having yet another round of Benghazi grandstanding hearings.

I’m betting there is more to this and under further examination will not be as nefarious as it appears. Like the IRS thing, Benghazi, and Fast and Furious.
On the other hand…having a Bank of America account terminated is actually a good thing.

It’s simple. The Obama administration wants to shut down the porn industry. They know they can’t get the Republican House to go along with that, so Obama’s just doing what needs to be done with his pen and his phone.

It’s another thing entirely if they are doing it in response to a government program that is already unfairly targeting people in other completely legal businesses over generalized suspicions of fraud.

I’m not even seeing “generalized suspicions of fraud” with this. This seems ridiculous on its face.

But those crafty swine at the DOJ really picked a good target here. Imagine the woe! How can anyone in this country enjoy porn that they know the performers of will not be able to store the earnings from in a reputable banking institution? Despite the subtle tyranny at work here, the political will to stop it is going to be embarrassing to muster.

Really, it’s not just the porn industry and it’s not because Obama wants to shut them down. Geez. There’s a long list of industries that have shown themselves to be involved in a lot of consumer fraud. The idea behind this is sound – it’s the implementation that went off the rails. This would be like closing the accounts of the cashier at the payday loan place – it makes no sense.

It’s simple. The Obama administration wants to shut down the porn industry. They know they can’t get the Republican House to go along with that, so Obama’s just doing what needs to be done with his pen and his phone.

Damn all those family-values conservatives and their unwavering support for pornography! Have they no shame?!

This is actually a pretty good tactic. By picking an industry that pretty much no one will want to defend (Alan Dershowitz, please pick up the phone), they can get a precedent they can then use against other lindustries. For example, Obama pledged to shut down the coal industry when he ran in 2008…

@Jenos Idanian #13:
Blah blah blah…
You can cherry pick talking points all day long.
It doesn’t change the..you know…facts.
You were embarrassed off this site for months because of the same thing.
Didn’t learn anything from that experience, eh?

@Jenos Idanian #13: The IRS has admitted to releasing info it shouldn’t have – whether through incompetence or not, we’ll never know. Employees were disciplined for this but you’ll only be happy if they’re taken out and shot and Obama resigns over it so why even bother? You can’t prove they did it on purpose or that the White House had anything to do with it.

I love how you’ve got “requesting” in quotes. It’s because they never requested the IRS to investigate anyone, they merely asked for any public documents available on the group, (It doesn’t surprise me that Rep Cummings would be investigating a group that had many complaints of voter intimidation lodged against it.) But if you can find where the congressman’s office specifically “requested” that they investigate them, please by all means show us. I suspect you didn’t even read the emails.

@beth: Did you actually read the article? The stuff Cummings’ staff asked for was almost word-for-word the info that the IRS asked of True The Vote, and far more intrusive than is normally requested (at least of non-conservative groups).

And Cummings denied that any such contact had happened — at least, until the e-mails surfaced. I don’t think he’s admitted that his earlier statements were “inoperative.”

Much like Obama’s first response that the IRS conduct was “outrageous” and “unacceptable.” That’s no longer operative.

The idea that the government can, without public disclosure and based on subjective criteria, go after perfectly legal classes of businesses in this manner should be disturbing to anyone who cares about civil liberties. That the political climate is such that discussions about this tend to turn into a “debate” over Obama, with all the consequent knee-jerk reactions, is unfortunate. This type of government power affects groups that are associated with both the “left” and “right”.

To that point we need to look at the actual substantive portion of Issa/the Committee’s letter to Cummings to appreciate the “weak tea” that the argument is being based on:

“The IRS and the Oversight Minority made numerous requests for virtually identical information from True the Vote, raising concerns that the IRS improperly shared protected taxpayer information with Rep. Cummings’ staff…. Although you have previously denied that your staff made inquiries to the IRS about conservative organization True the Vote that may have led to additional agency scrutiny, communication records between your staff and IRS officials – which you did not disclose to Majority Members or staff – indicates otherwise…. As the Committee is scheduled to consider a resolution holding Ms. Lerner, a participant in responding to your communications that you failed to disclose, in contempt of Congress, you have an obligation to fully explain your staff’s undisclosed contacts with the IRS.”
source: http://www.bizpacreview.com/2014/04/10/dem-elijah-cummings-defends-shocking-emails-showing-he-coordinated-with-irs-effort-to-target-true-the-vote-111723
Emphasis Mine.

Let’s talk about *facts* versus speculation. It’s a *fact* that Cummings staff made document requests. But as you point out, this is in keeping with the role of congressional oversight. It’s also apparently a *fact* that Cummings did not disclose all of these requests. I don’t know enough about procedure to know if those requests had to be legally disclosed or not.

However, the moment *may* enters into a sentence, we move from the realm of facts to *speculation.* Which means that there is no *proof* that either Cummings was connected to an investigation or even the fact that True the Vote received any additional scrutiny. Likewise, the goal of “raising concerns” is to actually lead to proving concerns. Again, Issa’s committee has been long on concerns short on proof.

The problem is that Issa’s investigations have been filled with a lot of “may” accusations that never seem to be ever be proven.

@Jenos Idanian #13: So they didn’t request the investigation and since you can’t back up what you said, you change the subject to yet another imagined slight the Obama administration has rained down on you. Got it.

ETA – and no I didn’t read the article. I read the actual emails that purportedly “request” the investigation. I suggest you do the same.

For a while, I thought it was quaint that so many people seem to believe that massive bureaucracies are agile enough (and willing) to respond to managerial direction from the temps who ‘run’ them. Like most infantile behaviors, though, it has quickly lost its cute charm and simply become annoying.

Given their track record of fraud and financial crime, it would be reasonable to include “member of Congress” on the hit-list of occupations. At which point, the problem would be solved pretty quickly…

@Matt Bernius: Yeah, it’s all a lot of “may.” There’s no concrete proof. The kind of proof that an investigation might uncover.

The kind of investigation that Cummings has been fighting tooth and nail, that Holder has been fighting tooth and nail, the kind that Obama has been fighting tooth and nail. The kind that Lerner fought tooth and nail until she was allowed to retire with full benefits.

So, in order to justify an investigation to find out the truth, we need to prove the truth beforehand? Nice little catch-22.

There are a whole host of ‘mays’ here, and a cornucopia of astonishing coincidences that all seem to play out to the Obama administration’s advantage. But we can’t investigate to prove if it’s all coincidence or deliberate action because first we have to prove that it’s deliberate action, right?

These investigations have been going on for years. Being fought tooth or nail or not, they continue to turn out nothing. And one has to being to wonder why getting actually facts is so hard despite all the powers of a Congressional Committee and the various Inspector Generals involved. There’s constant smoke, but no fire.

And the bigger issues here is you continue to present “mays” and “concerns” as *facts* and when this is pointed out, you just shift your argument without addressing the core issues (and the continuing lack of evidence).

@Matt Bernius: These investigations have been going on for years. Being fought tooth or nail or not, they continue to turn out nothing. And one has to being to wonder why getting actually facts is so hard despite all the powers of a Congressional Committee and the various Inspector Generals involved. There’s constant smoke, but no fire.

Let’s see… we finally have Lerner’s e-mails, and those produce even more smoke. We have Lerner refusing to testify. We have repeated cases of only conservative individuals and groups having their legally-confidential tax records being leaked. And we have the ranking member of the Committee lying about his office’s involvement in the matters at hand — when he’s not trying to shut down the investigation by any means necessary.

Kindly show me the rule that says that one side can 1) choose to “run out the clock” as their strategy, then 2) announce that the clock has run out, when 3) there was no clock in the first place.

But back to the actual story here… like I said, it’s battlespace preparation. It’s about setting a precedent. Next up are the “environmental criminals” or the Koch brothers or some other group the administration doesn’t like.

@rudderpedals: Would you both agree that immunizing Lerner to get her testimony is the serious way to find out what actually happened?

THE serious? No.

ONE serious? Yes.

Lerner has a history of targeting conservatives that dates back to her days in Clinton’s FEC. Plus, she was allowed to retire on full pension. I don’t mind if she gets a few more sticks waved at her before offering the carrot — if at all.

@Jenos Idanian #13:
3 cherry picked examples that you copied and pasted from Breitbart or Daily Caller or some other wingnut site which have nothing to do with the facts.
I thought you might have gotten better at this up while you were gone. But no. Same old Jenos. BS…BS…and more BS.

@C. Clavin: Cliffy, I gave you three examples, and you got nothing. Just like you got nothing on the actual topic of the thread, just like you got nothing in your head. You go keep chasing your own squirrels.

Hell, I even threw you a bone by bringing in the Koch brothers, and you didn’t even give it a sniff. Were you always this pathetic, or have I forgotten just how lame you were?

@Jenos Idanian #13:
And again, that entire response again makes it abundantly clear that you care far more about *getting people* than actually getting to the bottom of these issues (i.e. proving the grand conspiracy).

If there was some *grand conspiracy* here, it’s difficult to see how immunizing Lerner wouldn’t provide the most effective route to the facts — especially considering that the general opinion of the legal community is that the entire contempt of congress based on her opening statement is not going to fly in court.

BTW, if you wonder why people don’t particularly respect you or the basis your positions, I think this thread (culminating in that response) offers a lot of explanations.

No, we have Lerner refusing to become the Republicans’ Beltane sacrifice this year. She has repeatedly said that she would be happy to testify — with immunity. If you’re really after the truth, you should jump at that offer. So it must not be the truth that they’re after.

Edit: OK, I should have read to the bottom first. Others have covered this ground.

Either it’s a conspiracy — in which case immunizing Lerner lets you get at it — or it’s not, which case the last thing you want is Lerner’s testimony showing that it was a local bureaucratic snafu.

@Matt Bernius: And again, that entire response again makes it abundantly clear that you care far more about *getting people* than actually getting to the bottom of these issues (i.e. proving the grand conspiracy).

Yeah, bad me — I like it when people who do bad things get punished. Lerner has a lot to atone for.

But apparently you missed when I said that I still favor granting her immunity — but as a last resort. And there are a few angles that can be played out first. For starters, her pension…

Yeah, bad me — I like it when people who do bad things get punished. Lerner has a lot to atone for.

Acceptable position — but then you need to also accept what comes with it. So stop moaning about the committee being prevented from proving the grander picture when you are advocating taking steps that will hinder that process in the name of “punishing” the guilty.

As Dave Schuler wrote earlier this week:

As me auld mither used to say, we can have anything we want but we can’t have everything we want.

Looking to the crystal ball (based on the part performance of Issa’s committee) I have the following predictions: Two years from now, none of the “other options” have worked. No significant new information has come out on this. The window will completely pass to immunize Lerner. And two years from now you will continue to whine on about the reality of all of these *scandals* and how the administration managed to victimize all of us while holding no more actual proof than you have today.

The net result: No scalps will be taken at all. No connection to the administration will be found. And the courts will throw out the contempt of congress charges and Lerner will still have her pension.

Key question: Why is Chase the only bank doing this? If it was a government-inspired action, why haven’t other banks done the same? Chokepoint thus far has issued subpoenas to many, many banks in the effort to go after illegal online lenders.

And going after personal accounts is far different from the targets of Operation Chokepoint thus far, which have been illegal online lenders (though the industry claims it impacts the legal ones as well).

It seems odd to assign blame to the DOJ for this without knowing more.

@Jenos Idanian #13: I singled out immunity as the way because it’s headed towards passage of a highly questionable (thanks to the self incrimination assertion) House contempt resolution that’s not likely to loosen her tongue.

I wasn’t aware of the FEC history. You know if she gets use immunity I’m pretty sure she can be compelled to talk about that too.

The DOJ was given the power to effectively impose massive fines on those doing business with industries they don’t like.

No, the DOJ is fighting fraud by going after businesses that work with and profit from the fraudsters. There is no evidence this has anything to do with that. It is entirely baseless speculation.

If you read this, you may understand better, but given your knee jerk reaction about “industries they don’t like,” somehow I doubt it. Key passage:

And third, the Consumer Protection Working Group has prioritized the role of financial institutions in mass marketing fraud schemes — including deceptive payday loans, false offers of debt relief, fraudulent health care discount cards, and phony government grants, among other things — that cause billions of dollars in consumer losses and financially destroy some of our most vulnerable citizens. The Working Group also is investigating the businesses that process payments on behalf of the fraudulent merchants — financial intermediaries referred to as third-party payment processors. It’s this third priority that I’d like to discuss in a little more detail.

The reason that we are focused on financial institutions and payment processors is because they are the so-called bottlenecks, or choke-points, in the fraud committed by so many merchants that victimize consumers and launder their illegal proceeds. For example, third-party payment processors are frequently the means by which fraudulent merchants are able to get paid. They provide the scammers with access to the national banking system and facilitate the movement of money from the victim of the fraud to the scam artist. And financial institutions through which these fraudulent proceeds flow, we have seen, are not always blind to the fraud. In fact, we have observed that some financial institutions actually have been complicit in these schemes, ignoring their BSA/AML obligations, and either know about — or are willfully blind to — the fraudulent proceeds flowing through their institutions.

Our prioritization of this issue is based on this principle: If we can eliminate the mass-marketing fraudsters’ access to the U.S. financial system — that is, if we can stop the scammers from accessing consumers’ bank accounts — then we can protect the consumers and starve the scammers. This will significantly reduce the frequency of and harm caused by this type of fraud. We hope to close the access to the banking system that mass marketing fraudsters enjoy — effectively putting a chokehold on it — and put a stop to this billion dollar problem that has harmed so many American consumers, including many of our senior citizens.

Sadly, what we’ve seen is that too many banks allow payment processors to continue to maintain accounts within their institutions, despite the presence of glaring red flags indicative of fraud, such as high return rates on the processors’ accounts. High return rates trigger a duty by the bank and the third-party payment processor to inquire into the reasons for the high rate of returns, in particular whether the merchant is engaged in fraud.

Linking to the DOJ’s claim of what the program is intended to do is not an argument; it’s obeisance. I could also link you to government claims that their enhanced interrogation program was totally not torture and completely legal and didn’t exist anyway. Asset forfeiture programs are targeted at drug dealers hit snare innocent people. Structuring laws aimed at money launderers sometimes hit a family business. Programs to share military hardware give assault vehicles to small town cops.

All government programs claim nobel intentions and insist they will be free from abuse. What the government claims about these programs is one thing; what they actually *do* is frequently another. If this is the Choke Point program (and it may not be), which is only a few months old, I think it needs to be revisited.

(And even on its own merits, the program is dubious. If people are committing fraud, go after the fraudsters. Don’t go after the banks and effectively impose fines on these business because you think they might be engaged in fraud without, as far as I can tell, not even a hint of judicial review. This is just an expansion of the already abusive and abused structuring laws.)

Just as disgusting as it was for the wingnuts to constantly back Bush and Cheney no matter what the phuck ups (see Jenos, Exhibit A), its just as disconcerting for Dems to back Holder, a huge disaster at the DOJ.

This guy has busted pot clinincs, deported more aliens than any other admin, spies on citizens at an unprecedented rate etc.

Stop rationalizing obvious bad policy choices by this Wall Street connected former counsel at Covington and Burling, one of the most blue blood and connected firms in DC.

Linking to the DOJ’s claim of what the program is intended to do is not an argument; it’s obeisance.

Really? Linking is obeisance? Do explain.

Keep in mind my linking to a description of the effort was a response to your fact-free assertion that the DOJ can “impose massive fines on those doing business with industries they don’t like.” It’s actually businesses that break the law, but details are unimportant when you’re carrying a pitchfork.

What the government claims about these programs is one thing; what they actually *do* is frequently another.

Agreed. And it’s much easier to claim they are doing stuff with no knowledge of it than to insist on facts. You are, of course, free to take the easy way.

If people are committing fraud, go after the fraudsters.

You reveal a deep lack of understanding of these issues. First of all, the banks have legal responsibilities here that some are not complying with. Second, most such fraudsters are overseas. The reason they approach this problem through the banks is there are no other avenues, and banks have legal responsibilities.

ose fines on these business because you think they might be engaged in fraud without, as far as I can tell, not even a hint of judicial review.

You aren’t aware because you maintain willful ignorance. The DOJ takes the banks to court, like they did with First Bank of Delaware, as described in the link you decided not to follow, but claim is an example of my obeisance. You have no interest in facts or reality, just baseless assertions and the resultant outrage. It’s quite childish. Grow up.

“impose massive fines on those doing business with industries they don’t like.” It’s actually businesses that break the law, but details are unimportant when you’re carrying a pitchfork.

i did read the link. I should have said “effectively”. By closing off bank accounts, this imposes a burden on people who have not necessarily violated the law. And it does so under threat of fining the bank. The prosecution of banks who ignore fraudulent activity would be justified … if you can show it is fraudulent and not “seems fraudulent” because it meets Criterion X.

The reason for my alarm is that the program that has been created bears an eerie similarity to the government structuring laws that have made structuring itself a crime, even if the money involved is legal and seized money from completely innocent people. The logic is similar: criminals structure bank deposits to conceal criminal wrong-doing; therefore structuring proves criminal intent. Fraudsters have high credit rejection rates; therefore high credit rejection rates show criminal activity and banks should refuse to do business with anyone with high rejection rates.

The downfall of this is pretty obvious. Again, we don’t know that this particular incident is a result of Operation Choke Point. But it’s not difficult to imagine an industry like porn incurring a high fraud rate because of buyer’s remorse on the part of people who use it or people using someone else’s credit card to buy their porn. It’s not hard to imagine — like assert forfeiture and structuring laws — this coming down on people who have high rejection rates for reasons that aren’t their fault (e.g, a business in a high crime area or legitimate businesses that scammers use to test stolen credit cards).

The record of the DOJ when it comes to these matters had not earned them a lot of trust and should not.

Adult stars can probably legally sue Chase for attempting to illegally enforce religious law. Since their line of work is not illegal, Chase is using their own view of morality to deny some bank account services which seems to a violation of religious discrimination laws. Funny, that Chase thinks some people are so immoral, but has no problem foreclosing homes or cars from those who had health problems and were late paying their bills, and this is not immoral to these banker’s mentality.

@mantis: This sounds like some over-zealous underling at Chase interpreting someone else’s memo about “caution” and deciding it’s all so much safer if they do “outright ban”.

Sort of the logic some eager-beaver wet-behind-the-ears business major would think. Ok, I’ve been hired to minimize risks and make our due diligence very effective: The easiest way to do Due Diligence is never to lend to anyone, right? So you never have any risks?

(You don’t have any income either, but that’s not the business major’s problem….)

P.S. My own experience with Chase indicates they’re a big, slow-moving behemoth that mindlessly operates according to “written policy” no matter how stupid or inconsistent the policy is. I’ve been going through a refinance and the whole process has been considerably delayed because my situation is more complex than what they have laid out in their handbooks and they can’t figure out what pigeonhole to put me in.